Observations focused on the problems of an underdeveloped country, Venezuela, with some serendipity about the world (orchids, techs, science, investments, politics) at large. A famous Venezuelan, Juan Pablo Perez Alfonzo, referred to oil as the devil's excrement. For countries, easy wealth appears indeed to be the sure path to failure. Venezuela might be a clear example of that.

Archive for July 25th, 2004

Edgar Hernandez Behrens, Head of the Exchange control office CADIVI is one of those curious personalities of this Government who holds his position because of his loyalty and fundamentalism and not for his qualifications. A former military, loyal Chavista and deeply religious, to the extent that his offices’ web page says “God is love and prosperity”, he regularly makes statements that show his ignorance, what’s worse is that even when corrected, he continues saying and doing the same things.

His office has been in the news this week for a number of reasons. It was CADIVI that proposed in April 2003 a Bill for foreign exchange violations, which has mysteriously remained at the Committee level as if not to interfere with the lucrative foreign exchange activities of the revolution and the revolutionaries. But Hernandez Behrens has persisted and the first draft of the Bill was approved in May and was discussed again this week in the Finance Committee of the National Assembly.

There are two aspects of the bill that are of concern. The first one is that it criminalizes the possession of foreign currency. In order to carry foreign currency with you, you will have to carry a receipt as proof of purchase of the bills you may have on you. Mind you, since CADIVI does not currently approve the direct sale of foreign currency of any kind to anyone, it only approves the use of your credit cards abroad that means that you would have to find the original receipt from before exchange controls were imposed in early 2003 and carry it around when traveling.

But this is not what is bothersome. What worries me is that if passed as is, Venezuelans and foreigners traveling abroad will likely be searched, their money confiscated, abused and asked for bribes when they leave the country through the airports. As we like to say here, we have seen that movie before, authorities abusing their power for their own benefit, when laws give them some form of discretionary power. One MVR Deputy said during the testimony on the Bill that people did not have to worry, that they will not be harassed, but it is easy for him to say, as most Deputies and Government officials (from all sides of the political spectrum) have flunkies meet them when they leave or arrive in the country to speed up and “ease” the process. So what do they know about anyway?

What I worry is that soon we will have our new form of Saudi Arabia’s religious police well described so well in that great blog by the same name that I recommended a few months ago.I can imagine Hernandez Behrens creating the CADIVI police, with himself and chief, to check every Venezuelan leaving or entering the country to comply with this law, while millions are being stolen by leaders of the revolution via the same exchange control system as is happening today.

As of this were not enough, there is another article in the proposed law that essentially implies that every time a resident of Venezuela buys, sells, provides a service or trades something abroad, he will have to convert the foreign currency into local currency at the official rate of exchange. The article says very specifically that every time a transaction like that takes place whether “in Venezuela or abroad” the individual or company will have to change the currency at the official rate. This is clearly illegal and in violation of the countries laws. Venezuelan law in no way prohibits individuals or companies from holding foreign property, but this will de facto prohibit it, if approved as it is. Imagine, if you sell a stock, or a bond that you hold abroad for example, you are told you have to change the foreign currency into bolivars. The only restriction currently established by Venezuelan laws is that you have to pay taxes on any gains anywhere in the world, but you can own any instrument or property you wish.

Of course, there are ways around it. If the language in the bill remains dense like of is today, there will be a mad rush by Venezuelan individuals and companies to change their assets in their current brokerage or investment account to be owned by foreign company, so as to be exempt from the law.

”We are thinking of allowing sending capitals abroad, a convertibility of capitals. For example, a Venezuelan that sells a farm, an apartment. He wants to convert his bolivars to foreign currency? He will convert 200 million bolivars, as an example, into 200,000 dollars, but he will have to pay a tax…In the US this tax is 30% (??), I think in Colombia it is 20%, we have to study what is the ideal percentage to remove the motivation for those capitals to flee, but we have to allow it.”

No such tax exists in the US where billions are allowed to come in and out daily. I don’t know if it does exist in Colombia. Various spokesmen have told Mr. Behrens of his ignorance via the press and the media, but when you are a fundamentalist, you are always right, so you repeat lies so many times that they become the truth. Such is the case of our very own religious policeman, who soon may acquire new powers to spread his will and his word.

Edgar Hernandez Behrens, Head of the Exchange control office CADIVI is one of those curious personalities of this Government who holds his position because of his loyalty and fundamentalism and not for his qualifications. A former military, loyal Chavista and deeply religious, to the extent that his offices’ web page says “God is love and prosperity”, he regularly makes statements that show his ignorance, what’s worse is that even when corrected, he continues saying and doing the same things.

His office has been in the news this week for a number of reasons. It was CADIVI that proposed in April 2003 a Bill for foreign exchange violations, which has mysteriously remained at the Committee level as if not to interfere with the lucrative foreign exchange activities of the revolution and the revolutionaries. But Hernandez Behrens has persisted and the first draft of the Bill was approved in May and was discussed again this week in the Finance Committee of the National Assembly.

There are two aspects of the bill that are of concern. The first one is that it criminalizes the possession of foreign currency. In order to carry foreign currency with you, you will have to carry a receipt as proof of purchase of the bills you may have on you. Mind you, since CADIVI does not currently approve the direct sale of foreign currency of any kind to anyone, it only approves the use of your credit cards abroad that means that you would have to find the original receipt from before exchange controls were imposed in early 2003 and carry it around when traveling.

But this is not what is bothersome. What worries me is that if passed as is, Venezuelans and foreigners traveling abroad will likely be searched, their money confiscated, abused and asked for bribes when they leave the country through the airports. As we like to say here, we have seen that movie before, authorities abusing their power for their own benefit, when laws give them some form of discretionary power. One MVR Deputy said during the testimony on the Bill that people did not have to worry, that they will not be harassed, but it is easy for him to say, as most Deputies and Government officials (from all sides of the political spectrum) have flunkies meet them when they leave or arrive in the country to speed up and “ease” the process. So what do they know about anyway?

What I worry is that soon we will have our new form of Saudi Arabia’s religious police well described so well in that great blog by the same name that I recommended a few months ago.I can imagine Hernandez Behrens creating the CADIVI police, with himself and chief, to check every Venezuelan leaving or entering the country to comply with this law, while millions are being stolen by leaders of the revolution via the same exchange control system as is happening today.

As of this were not enough, there is another article in the proposed law that essentially implies that every time a resident of Venezuela buys, sells, provides a service or trades something abroad, he will have to convert the foreign currency into local currency at the official rate of exchange. The article says very specifically that every time a transaction like that takes place whether “in Venezuela or abroad” the individual or company will have to change the currency at the official rate. This is clearly illegal and in violation of the countries laws. Venezuelan law in no way prohibits individuals or companies from holding foreign property, but this will de facto prohibit it, if approved as it is. Imagine, if you sell a stock, or a bond that you hold abroad for example, you are told you have to change the foreign currency into bolivars. The only restriction currently established by Venezuelan laws is that you have to pay taxes on any gains anywhere in the world, but you can own any instrument or property you wish.

Of course, there are ways around it. If the language in the bill remains dense like of is today, there will be a mad rush by Venezuelan individuals and companies to change their assets in their current brokerage or investment account to be owned by foreign company, so as to be exempt from the law.

”We are thinking of allowing sending capitals abroad, a convertibility of capitals. For example, a Venezuelan that sells a farm, an apartment. He wants to convert his bolivars to foreign currency? He will convert 200 million bolivars, as an example, into 200,000 dollars, but he will have to pay a tax…In the US this tax is 30% (??), I think in Colombia it is 20%, we have to study what is the ideal percentage to remove the motivation for those capitals to flee, but we have to allow it.”

No such tax exists in the US where billions are allowed to come in and out daily. I don’t know if it does exist in Colombia. Various spokesmen have told Mr. Behrens of his ignorance via the press and the media, but when you are a fundamentalist, you are always right, so you repeat lies so many times that they become the truth. Such is the case of our very own religious policeman, who soon may acquire new powers to spread his will and his word.

This is how unethical this Government is. This is a screen shot of the web page www.venezuela.gov.ve the official page of the Venezuelan Government. But what do you see? On top a banner about the battle of Santa Ines the rallying cry for Chavez’ campaign. Below you can download the working manual for Chavez’ campaign command Comando Maisanta and on the right you have a link to the Circulo Bolivarianos, strictly a party activity. This is clearly using Government resources for party activities which is forbidden by law, but the Government could care lessabout it. Government funds are being used for the obsene and advantageoius campaign that Chavez is carrying out. But in the en it will not matter, people are fed up with all of this corruption.

This is how unethical this Government is. This is a screen shot of the web page www.venezuela.gov.ve the official page of the Venezuelan Government. But what do you see? On top a banner about the battle of Santa Ines the rallying cry for Chavez’ campaign. Below you can download the working manual for Chavez’ campaign command Comando Maisanta and on the right you have a link to the Circulo Bolivarianos, strictly a party activity. This is clearly using Government resources for party activities which is forbidden by law, but the Government could care lessabout it. Government funds are being used for the obsene and advantageoius campaign that Chavez is carrying out. But in the en it will not matter, people are fed up with all of this corruption.